With the ASX falling by 6% over the course of the last month, it is perhaps understandable that a number of investors are becoming somewhat nervous about the future prospects for shares. Certainly, the situation in Europe appears as though it will rumble on for a good while yet. Even if Greece stays in the Euro, the prospects for the region in the near term are uncertain.
However, it is times like these that long term investors can buy shares in quality companies at distressed prices. Certainly, their valuations may dip further in the short run but, as history has shown, buying at such times can be a great way to boost your financial future. With that in mind, do these three stocks shape up as being worthy of a place in your portfolio?
Suncorp Group Ltd
Despite falling by 5% since the turn of the year, Suncorp Group Ltd (ASX: SUN) has still managed to post an annualised total return of 26% during the last three years. And, looking ahead, its price to book (P/B) ratio of just 1.25 indicates considerable upside potential – especially while the ASX has a P/B ratio of 1.29 and the wider insurance sector has a P/B ratio of 1.98.
Moreover, Suncorp has a clear catalyst to increase its valuation, with the company's expected 75% rise in its bottom line during the next two years likely to improve investor sentiment. This also should allow it to continue to pay out a generous dividend; with Suncorp yielding 6.1% at the present time, it offer superior income potential to the ASX and its sector, with them offering yields of 4.6% and 4.7% respectively.
Crown Resorts Ltd
With Aussie interest rates moving downwards, one company set to benefit is gaming and entertainment company, Crown Resorts Ltd (ASX: CWN). In fact, a weaker Aussie dollar should help the company to offset a weak outlook for its key market, Macau, which has been experiencing a slowdown as a result of China's so-called 'soft landing'. Evidence of this can be seen in Crown Resorts' earnings forecasts, with the company set to report an annualised near-12% fall over the next two years.
However, Crown Resorts has an excellent track record of growth, with its bottom line rising at an annualised rate of 17.6% during the last five years. And, while Crown Resorts trades at a premium to the wider index, with it having a price to earnings (P/E) ratio of 17.4 versus 15.8 for the ASX, it remains a sound buy.
Super Retail Group Ltd
Also due to benefit from a falling interest rate is diversified retailer, Super Retail Group Ltd (ASX: SUL). Its bottom line is expected to rise by almost 8% per annum during the next two years, with cheap credit having the potential to boost consumer spending moving forward. Despite this, it trades on a price to sales (P/S) ratio of just 0.87. This compares favourably to the ASX's P/S ratio of 1.49.
In addition, Super Retail currently yields 4.2%, with dividends having increased at an annualised rate of 23.2% during the last ten years. This strong track record, plus a payout ratio of 70%, indicate that Super Retail could prove to be a top notch income play over the medium term.
